Attached files
| file | filename |
|---|---|
| 8-K - 8-K - HAEMONETICS CORP | form8-k.htm |
FOR RELEASE: | CONTACT: | |
Date October 29, 2012 | Gerry Gould, VP-Investor Relations | |
Time 6:00 am Eastern | Tel. (781) 356-9402 | |
gerry.gould@haemonetics.com | ||
Alt. (781) 356-9613 | ||
Haemonetics Reports Second Quarter Fiscal 2013 Revenue Up 22%,
Organic Revenue Up 6% and Adjusted EPS of $0.90,
Reaffirms Fiscal 2013 Guidance and Announces Two-For-One Stock Split
Braintree, MA, October 29, 2012 - Haemonetics Corporation (NYSE: HAE) today reported second quarter 2013 net revenue of $218.2 million, up 22%, GAAP net income of $6.5 million, down 53%, and diluted earnings per share of $0.25, down 53%. Excluding restructuring, transformation, integration and transaction costs, adjusted net income was $23.5 million, up 26%, and adjusted earnings per share were $0.90, up 25%. Organic net revenue, exclusive of the recently acquired whole blood business, was $189.6 million, up 6%. Excluding currency impacts, net revenue was up 22% in total and 6% on an organic basis.1
Brian Concannon, Haemonetics' President and CEO, commented: “The highlights of our second quarter were the successful acquisition of the whole blood business and continued organic revenue growth in disposables across our entire product portfolio, especially in our Hospital business where 14% second quarter growth followed 11% growth in the first quarter. Strong demand for the Cell Saver® Elite® and TEG® disposables, and growth in our OrthoPAT® business, provide strong evidence that our Hospital customers continue to embrace our Blood Management Solutions recognizing the inherent value proposition offered.”
STRATEGIC AND PRODUCT GROWTH HIGHLIGHTS
Haemonetics continues to make progress expanding its business, reporting the following highlights:
• | 22% revenue growth including 6% organic revenue growth. |
• | 7% revenue growth in plasma disposables. |
• | 16% revenue growth in surgical disposables. |
• | 23% revenue growth in diagnostic disposables. |
• | 5% revenue growth in OrthoPAT disposables, a return to growth as expected. |
• | 21% organic revenue growth in China. |
• | $29 million of revenue from whole blood with uninterrupted customer service. |
• | Announced two-for-one stock split. |
A revenue breakdown follows:
Plasma
Plasma disposables revenue was $68.7 million, up 7% and growth in North America was up 10%. On a year-to-date basis, global plasma revenue is up 4%. The Company continues to expect its plasma business to grow 4-6% in fiscal 2013 consistent with end market growth rates for plasma derived biopharmaceuticals.
Blood Center
Platelet disposables revenue was $43.2 million, up 2% over the prior year's second fiscal quarter, with continued benefit from strong sales in emerging markets. Red cell disposables revenue was $11.9 million, up 2%. Though the clinical demand for blood remained flat, red cell revenue grew on increased collections as the Company leveraged its IMPACT® selling approach to advance Blood Management Solutions.
On a year-to-date basis, blood center revenue is up 1% organically and the Company continues to expect its blood center business to grow 0-2% organically in fiscal 2013, with continued growth in both platelet and red cell disposables as the year progresses. Whole blood revenue of $29 million was in line with expectations considering buy-ins by customers in advance of the ownership transfer. The Company is affirming its previous guidance for whole blood revenue of $135-$145 million.
Hospital
Surgical disposables revenue was $18.8 million in the quarter, up 16%. Notably this was the fifth consecutive quarterly increase, as the product launch of the Cell Saver Elite device continues to accelerate. Recent strong Cell Saver Elite equipment sales drove near term disposables growth.
Disposables revenue from the OrthoPAT orthopedic perioperative autotransfusion system was $7.6 million in the quarter, up 5% following a prior quarter decline of 3% and a full fiscal 2012 decline of 12%. The impact of the fiscal 2012 voluntary recall of pre-2002 devices upon disposables usage has ended and the expected return to growth has begun.
Diagnostics revenue was $6.9 million in the quarter, up 23%, as the Company's IMPACT initiative continues to drive growth in disposables utilized in the TEG® Thrombelastograph® Hemostasis Analyzer. TEG equipment sales were especially strong in recent quarters, a key indicator for near term future disposables revenue growth. TEG disposables sales also increased 23% in China.
On a year-to-date basis, Hospital revenue is up 13% and the Company continues to expect its hospital business to grow 12-15% in fiscal 2013 with continued strength in surgical and diagnostics disposables, and continued OrthoPAT disposables revenue growth.
Software and Equipment
Software Solutions revenue was $18.0 million, up 5%. The enhanced offering of software products for Blood Center and Hospital customers drove revenue growth of 10% in North America. On a year-to-date basis, software revenue is flat with prior year levels and trending upward, thus the Company continues to expect its software business to grow 5-7% in fiscal 2013.
Equipment and other revenue was $14.3 million, down 3% following several quarters with strong double-digit percentage growth. Equipment revenue is influenced by the timing of tenders and capital budgets and on a year-to-date basis, Equipment revenue is up 7%. Sales of Cell Saver Elite and TEG devices in emerging markets continue to be particularly strong.
Haemonetics reported second quarter fiscal 2013 organic revenue growth of 8% in North America and 10% in Asia, along with a 2% decline in Europe. Organic revenue growth in Japan was 6%.
Adjusted gross profit was $111.6 million up $20.2 million or 22.1%. Adjusted gross margin was 51.0%, up 10 basis points, as benefits in the core business were more than sufficient to offset the impact of revenue mix toward lower margin whole blood disposables.
Adjusted operating expenses were $78.0 million, up $12.2 million or 18.5%. Operating expense increases included $8.0 million in the new whole blood business and planned investments in global growth initiatives, emerging markets and infrastructure to support anticipated organic and acquisitive revenue growth; these expenses are expected to accelerate in the second half of the fiscal year. Additionally, a full accrual of performance based compensation was provided in the second quarter of fiscal 2013.
Adjusted operating margin of 15.4% was up 120 basis points and reflected the inclusion of only seven weeks' profits of the newly acquired whole blood business. Operating margin benefited from a managed ramp-up of investments in global growth initiatives and certain expenditures related to infrastructure build for the acquired whole blood business.
Acquisition related amortization expense included in second quarter adjusted earnings was $5.7 million in fiscal 2013 and $2.5 million in fiscal 2012, or $0.14 and $0.06 per share respectively. Year-to-date adjusted earnings included $8.3 million in fiscal 2013 and $5.0 million in fiscal 2012, or $0.22 and $0.12 per share respectively, of acquisition-related amortization expense.
Balance Sheet and Cash Flow
Cash on hand was $187 million, a decrease of $49 million during the quarter, as the Company utilized $60 million of cash toward the whole blood business acquisition. The Company reported first half free cash flow before restructuring, transformation, integration and transaction costs of $22 million, a reduced level from the prior year due to an anticipated buildup of certain required elements of working capital not acquired.
Fiscal 2013 Guidance and Fiscal 2014 Outlook
The Company reaffirmed its previous fiscal 2013 organic revenue growth expectation of approximately 4-6%, with plasma expected to grow 4-6%, Blood Center 0-2%, Hospital products 12-15%, and Software Solutions 5-7%. Whole blood revenue expectations are also reaffirmed at approximately $135-$145 million for fiscal 2013. Thus, total revenue is estimated in the range of $890-$915 million, up 23-26%.
Full year adjusted gross margin is expected to be in a range of 50-51% inclusive of the lower gross margin whole blood product line. Adjusted operating income is expected to be between $127-$130 million, and free cash flow will approximate $85 million before funding restructuring, transformation and transaction costs. The paced ramp-up of expenses is expected to accelerate in the second half of the year. Accordingly, the previously indicated adjusted earnings per share range of $3.30-$3.40, up 9%-12% over fiscal 2012, is also reaffirmed. Whole blood profits, IT and other costs of scaling the Company's infrastructure to meet the needs of the combined businesses, as well as amortization expenses, financing costs and income taxes are included in adjusted earnings projections.
The Company continues to expect to incur costs in the current fiscal year for integration activities of $30-$35 million, which are excluded from adjusted earnings guidance. Annual guidance also assumes the exclusion of approximately $3 million of transaction related costs and approximately $13 million of adjustments to cost of goods sold on the sale of acquired whole blood and other filter inventories. The Company also expects to incur restructuring and transformation costs within the base business of $3-$4 million which are excluded from adjusted earnings guidance.
More information on fiscal year 2013 guidance, including income statement scenarios underlying the lower and upper ends of the adjusted earnings per share guidance range, can be found in the Investor Relations section of our web site at http://www.haemonetics.com.1
For fiscal 2014, previous indications are affirmed, as organic revenue growth is expected to approximate 5-7%. Together with a full year of revenues from the acquired whole blood business, which is expected to contribute incremental revenue of $70 million related to the timing of the acquisition, fiscal 2014 revenues are expected to surpass $1 billion. The Company's previously provided preliminary outlook for fiscal 2014 adjusted earnings per share of $3.90-$4.10, approximately 20% above fiscal 2013 expected earnings per share, is affirmed. Included in these amounts are approximately $29 million or $0.75 per share of acquisition related amortization expense.
Mr. Concannon added: “While completing the largest acquisition in our company's history, our team remained customer focused and delivered excellent second quarter results. This included solid organic revenue growth of 6%, $29 million of whole blood revenue realized through seamless customer ordering, and effective cost management. We remain confident in our business fundamentals and are able to reaffirm the fiscal 2013 revenue and earnings guidance, and the fiscal 2014 preliminary outlook that we previously provided.”
Stock Split
The Company announced today that its Board of Directors approved a two-for-one split of the Company's common stock, which will be effected in the form of a 100 percent stock dividend. The stock dividend will be distributed November 30 to stockholders of record as of November 9. Haemonetics' common stock will begin trading on a post-split basis on the New York Stock Exchange on December 3, 2012.
Each share of the Company's pre-split common stock held by a shareholder, including shares subject to outstanding stock options and shares available for grant under the Company's equity incentive plans, will be represented by two shares of the Company's post-split common stock. The split will affect all stockholders uniformly and will not affect any stockholder's ownership percentage.
The Company expects that this split will make its shares more accessible, increase its shareholder base and improve its market liquidity. With the Company's recent growth, long term shareholder value creation and its most significant acquisition recently completed, the stock split also reflects confidence in the Company's strength and ability to continue to generate long term growth and financial performance.
Fiscal 2013 Share Repurchase Program
The Company repurchased 74,300 shares in the open market at an average cost of $71.91, returning $5.3 million to shareholders during the second quarter. The Board of Directors previously approved the repurchase of up to $50 million of shares in the open market during the remainder of fiscal 2013.
CONFERENCE CALL
Haemonetics will host a webcast to discuss the first quarter results on Monday, October 29, 2012 at 8:00 am Eastern time. Interested parties can participate at: http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=72118&eventID=4839735.
Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative blood management solutions for our customers. Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve clinical outcomes and reduce the cost of healthcare for blood collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at http://www.haemonetics.com.
This release contains forward-looking statements that involve risks and uncertainties, including the effects of disruption from the acquisition of the Pall Transfusion Medicine business making it more difficult to maintain relationships with employees, customers, vendors and other business partners, unexpected expenses incurred to integrate the Pall Transfusion Medicine business, technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, product quality, market acceptance, regulatory uncertainties, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission. The foregoing list should not be construed as exhaustive.
Forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements. Information set forth in this press release is current as of today and the Company undertakes no duty or obligation to update this information.
1A reconciliation of GAAP to adjusted financial results is included at the end of the financial sections of this press release as well as on the web at http://www.haemonetics.com. GAAP results include the following items which are excluded from adjusted results: $14 million of pre-tax integration, transaction and base business restructuring and transformation costs in the second quarter of fiscal 2013 and $9 million of pre-tax restructuring and transformation costs and $2 million of contingent consideration income in the second quarter of fiscal 2012. The $14 million pre-tax amount in the second quarter of fiscal 2013 includes: $11 million of integration costs, $1 million of transaction costs and $2 million of base business restructuring and transformation costs. Additionally, cost of goods sold in the second quarter of fiscal 2013 GAAP results include $10 million attributable to amounts in excess of manufactured cost of acquired whole blood and other filter inventory sold during the quarter. Because such amounts are limited to the whole blood and other filter inventory on hand at the date of the acquisition and do not reflect the ongoing profitability of the acquired business, they have also been excluded from adjusted results.
Haemonetics Corporation Financial Summary
(Unaudited data in thousands, except per share data)
Consolidated Statements of Income for the Second Quarter of FY13 and FY12
9/29/2012 | 10/1/2011 | % Inc/(Dec) | |||||||||||||
As Reported | As Reported | vs Prior Year | |||||||||||||
Net revenues | $ | 218,178 | $ | 179,445 | 21.6 | % | |||||||||
Gross profit | 101,762 | 89,949 | 13.1 | % | |||||||||||
R&D | 10,827 | 10,350 | 4.6 | % | |||||||||||
S,G&A | 81,034 | 62,613 | 29.4 | % | |||||||||||
Contingent consideration income | — | (1,580 | ) | ||||||||||||
Operating expenses | 91,861 | 71,383 | 28.7 | % | |||||||||||
Operating income | 9,901 | 18,566 | (46.7 | ) | % | ||||||||||
Other income (expense), net | (1,311 | ) | 445 | ||||||||||||
Income before taxes | 8,590 | 19,011 | (54.8 | ) | % | ||||||||||
Tax expense | 2,043 | 5,131 | (60.2 | ) | % | ||||||||||
Net income | $ | 6,547 | $ | 13,880 | (52.8 | ) | % | ||||||||
Net income per common share assuming dilution | $ | 0.25 | $ | 0.54 | (53.7 | ) | % | ||||||||
Weighted average number of shares: | |||||||||||||||
Basic | 25,710 | 25,418 | |||||||||||||
Diluted | 26,157 | 25,843 | |||||||||||||
Profit Margins: | Inc/(Dec) vs prior year profit margin % | ||||||||||||||
Gross profit | 46.6 | % | 50.1 | % | (3.5 | ) | % | ||||||||
R&D | 5.0 | % | 5.8 | % | (0.8 | ) | % | ||||||||
S,G&A | 37.1 | % | 34.9 | % | 2.2 | % | |||||||||
Operating income | 4.5 | % | 10.3 | % | (5.8 | ) | % | ||||||||
Income before taxes | 3.9 | % | 10.6 | % | (6.7 | ) | % | ||||||||
Net income | 3.0 | % | 7.7 | % | (4.7 | ) | % | ||||||||
Haemonetics Corporation Financial Summary | |||||||||||||||
(Unaudited data in thousands, except per share data) | |||||||||||||||
Consolidated Statements of Income for Year-to-Date FY13 and FY12 | |||||||||||||||
9/29/2012 | 10/1/2011 | % Inc/(Dec) | |||||||||||||
As Reported | As Reported | vs Prior Year | |||||||||||||
Net revenues | $ | 394,653 | $ | 350,014 | 12.8 | % | |||||||||
Gross profit | 191,875 | 178,698 | 7.4 | % | |||||||||||
R&D | 20,235 | 18,959 | 6.7 | % | |||||||||||
S,G&A | 148,659 | 118,844 | 25.1 | % | |||||||||||
Contingent consideration income | — | (1,580 | ) | (100.0 | ) | % | |||||||||
Operating expenses | 168,894 | 136,223 | 24.0 | % | |||||||||||
Operating income | 22,981 | 42,475 | (45.9 | ) | % | ||||||||||
Other income (expense), net | (975 | ) | 230 | ||||||||||||
Income before taxes | 22,006 | 42,705 | (48.5 | ) | % | ||||||||||
Tax expense | 5,671 | 11,877 | (52.3 | ) | % | ||||||||||
Net income | $ | 16,335 | $ | 30,828 | (47.0 | ) | % | ||||||||
Net income per common share assuming dilution | $ | 0.63 | $ | 1.18 | (46.6 | ) | % | ||||||||
Weighted average number of shares: | |||||||||||||||
Basic | 25,596 | 25,575 | |||||||||||||
Diluted | 26,044 | 26,029 | |||||||||||||
Profit Margins: | Inc/(Dec) vs prior year profit margin % | ||||||||||||||
Gross profit | 48.6 | % | 51.1 | % | (2.5 | ) | % | ||||||||
R&D | 5.1 | % | 5.4 | % | (0.3 | ) | % | ||||||||
S,G&A | 37.7 | % | 34.0 | % | 3.7 | % | |||||||||
Operating income | 5.8 | % | 12.1 | % | (6.3 | ) | % | ||||||||
Income before taxes | 5.6 | % | 12.2 | % | (6.6 | ) | % | ||||||||
Net income | 4.1 | % | 8.8 | % | (4.7 | ) | % | ||||||||
Revenue Analysis for the Second Quarter and Year-To-Date FY13 and FY12 | ||||||||||||||
(Unaudited data in thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
9/29/2012 | 10/1/2011 | % Inc/(Dec) | ||||||||||||
As Reported | As Reported | vs Prior Year | ||||||||||||
Revenues by geography | ||||||||||||||
United States | $ | 113,015 | $ | 86,339 | 30.9 | % | ||||||||
International | 105,163 | 93,106 | 12.9 | % | ||||||||||
Net revenues | $ | 218,178 | $ | 179,445 | 21.6 | % | ||||||||
Disposable revenues | ||||||||||||||
Plasma disposables | $ | 68,677 | $ | 64,408 | 6.6 | % | ||||||||
Blood center disposables | ||||||||||||||
Platelet | 43,198 | 42,195 | 2.4 | % | ||||||||||
Red cell | 11,918 | 11,645 | 2.3 | % | ||||||||||
Whole blood | 28,620 | — | ||||||||||||
83,736 | 53,840 | 55.5 | % | |||||||||||
Hospital disposables | ||||||||||||||
Surgical | 18,804 | 16,206 | 16.0 | % | ||||||||||
OrthoPAT | 7,645 | 7,295 | 4.8 | % | ||||||||||
Diagnostics | 6,937 | 5,659 | 22.6 | % | ||||||||||
33,386 | 29,160 | 14.5 | % | |||||||||||
Subtotal | 185,799 | 147,408 | 26.0 | % | ||||||||||
Software solutions | 18,043 | 17,199 | 4.9 | % | ||||||||||
Equipment & other | 14,336 | 14,838 | (3.4 | ) | % | |||||||||
Net revenues | $ | 218,178 | $ | 179,445 | 21.6 | % | ||||||||
Six Months Ended | ||||||||||||||
9/29/2012 | 10/1/2011 | % Inc/(Dec) | ||||||||||||
As Reported | As Reported | vs Prior Year | ||||||||||||
Revenues by geography | ||||||||||||||
United States | $ | 200,922 | $ | 172,734 | 16.3 | % | ||||||||
International | 193,731 | 177,280 | 9.3 | % | ||||||||||
Net revenues | $ | 394,653 | $ | 350,014 | 12.8 | % | ||||||||
Disposable revenues | ||||||||||||||
Plasma disposables | $ | 132,555 | $ | 127,168 | 4.2 | % | ||||||||
Blood center disposables | ||||||||||||||
Platelet | 80,440 | 79,504 | 1.2 | % | ||||||||||
Red cell | 23,986 | 23,514 | 2.0 | % | ||||||||||
Whole blood | 28,620 | — | ||||||||||||
133,046 | 103,018 | 29.1 | % | |||||||||||
Hospital disposables | ||||||||||||||
Surgical | 37,064 | 31,948 | 16.0 | % | ||||||||||
OrthoPAT | 15,186 | 15,049 | 0.9 | % | ||||||||||
Diagnostics | 13,436 | 11,273 | 19.2 | % | ||||||||||
65,686 | 58,270 | 12.7 | % | |||||||||||
Subtotal | 331,287 | 288,456 | 14.8 | % | ||||||||||
Software solutions | 35,347 | 35,359 | — | % | ||||||||||
Equipment & other | 28,019 | 26,199 | 6.9 | % | ||||||||||
Net revenues | $ | 394,653 | $ | 350,014 | 12.8 | % | ||||||||
Consolidated Balance Sheets | |||||||||||
(Unaudited data in thousands) | |||||||||||
As of | |||||||||||
9/29/2012 | 3/31/2012 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 187,051 | $ | 228,861 | |||||||
Accounts receivable, net | 158,175 | 135,464 | |||||||||
Inventories, net | 173,506 | 117,163 | |||||||||
Other current assets | 58,068 | 45,641 | |||||||||
Total current assets | 576,800 | 527,129 | |||||||||
Net PP&E | 239,160 | 161,657 | |||||||||
Other assets | 638,595 | 222,349 | |||||||||
Total assets | $ | 1,454,555 | $ | 911,135 | |||||||
As of | |||||||||||
9/29/2012 | 3/31/2012 | ||||||||||
Liabilities & Stockholders' Equity | |||||||||||
Short term debt & current maturities | $ | 4,249 | $ | 894 | |||||||
Other current liabilities | 151,945 | 129,850 | |||||||||
Total current liabilities | 156,194 | 130,744 | |||||||||
Long-term debt | 477,402 | 2,877 | |||||||||
Other long-term liabilities | 48,993 | 44,883 | |||||||||
Stockholders' equity | 771,966 | 732,631 | |||||||||
Total liabilities & stockholders' equity | $ | 1,454,555 | $ | 911,135 | |||||||
Free Cash Flow Reconciliation | |||||||||
(Unaudited data in thousands) | |||||||||
Three Months Ended | |||||||||
9/29/2012 | 10/1/2011 | ||||||||
GAAP cash flow from operations | $ | 33,014 | $ | 25,408 | |||||
Capital expenditure | (25,991 | ) | (12,042 | ) | |||||
Proceeds from sale of property, plant and equipment | 103 | 111 | |||||||
Net investment in property, plant and equipment | (25,888 | ) | (11,931 | ) | |||||
Free cash flow after restructuring and transformation costs | 7,126 | 13,477 | |||||||
Restructuring and transformation costs | 11,541 | 2,807 | |||||||
Free cash flow before restructuring and transformation costs | $ | 18,667 | $ | 16,284 | |||||
Six Months Ended | |||||||||
9/29/2012 | 10/1/2011 | ||||||||
GAAP cash flow from operations | $ | 33,567 | $ | 52,539 | |||||
Capital expenditure | (34,432 | ) | (23,843 | ) | |||||
Proceeds from sale of property, plant and equipment | 355 | 130 | |||||||
Net investment in property, plant and equipment | (34,077 | ) | (23,713 | ) | |||||
Free cash flow after restructuring and transformation costs | (510 | ) | 28,826 | ||||||
Restructuring and transformation costs | 22,286 | 4,585 | |||||||
Free cash flow before restructuring and transformation costs | $ | 21,776 | $ | 33,411 | |||||
Haemonetics Corporation Financial Summary | ||||
Reconciliation of Non-GAAP Measures | ||||
Haemonetics has presented supplemental non-GAAP financial measures as part of this earnings release. A reconciliation is provided below that reconciles each non-GAAP financial measure with the most comparable GAAP measure. The presentation of non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the most directly comparable GAAP measures. There are material limitations to the usefulness of non-GAAP measures on a standalone basis, including the lack of comparability to the GAAP financial results of other companies. | ||||
These measures are used by management to monitor the financial performance of the business, inform business decision making, and forecast future results. Performance targets for management are established based upon these non-GAAP measures. In the reconciliations below, we have removed restructuring and transformation costs and certain cost of goods sold related to the acquisition of Pall's Transfusion Medicine Business (“Whole Blood Acquisition”) from our GAAP expenses. Our restructuring and transformation costs in fiscal 2013 are principally related to transaction and integration expenses related to the Whole Blood Acquisition. The cost of goods sold removed from GAAP expenses related to the Whole Blood Acquisition principally relate to the increase in the fair value of acquired whole blood inventory required under purchase accounting standards. We believe this information is useful for investors because it allows for an evaluation of the Company with a focus on the performance of our core operations. | ||||
Non-GAAP Gross Profit The use of these non-GAAP measures allows management to monitor the level of total gross profits without the costs of our business transformation. We establish our budgets, forecasts, and performance targets on this basis. | ||||
Non-GAAP S,G&A and Non-GAAP Operating Expenses The use of this non-GAAP measure allows management to monitor the ongoing level of spend that is necessary to support the business in a period when we are not transforming our business or completing an acquisition of in-process research and development. We establish our budgets, forecasts, and performance targets excluding these costs. | ||||
Non-GAAP Operating Income and Non-GAAP Income before Income Taxes The use of these non-GAAP measures allows management to monitor the level of operating and total pre-tax profits without the costs of our business transformation. We establish our budgets, forecasts, and performance targets on this basis. | ||||
Non-GAAP Net Income and Earnings per Share The use of these non-GAAP measures allows management to monitor the level of net income and earnings per share excluding both the costs of our business transformation, as well as any related tax effects. We establish our budgets, forecasts, and performance targets on this basis. | ||||
Reconciliation of Non-GAAP Measures for the Second Quarter of FY13 and FY12 | ||||||||||
Three Months Ended | ||||||||||
9/29/2012 | 10/1/2011 | |||||||||
Non-GAAP gross profit | ||||||||||
GAAP gross profit | $ | 101,762 | $ | 89,949 | ||||||
Whole Blood Acquisition cost of goods sold adjustment | 9,788 | — | ||||||||
Restructuring and transformation costs | — | 1,381 | ||||||||
Non-GAAP gross profit | $ | 111,550 | $ | 91,330 | ||||||
Non-GAAP R&D | ||||||||||
GAAP R&D | $ | 10,827 | $ | 10,350 | ||||||
Restructuring and transformation costs | (1,592 | ) | (1,356 | ) | ||||||
Non-GAAP R&D | $ | 9,235 | $ | 8,994 | ||||||
Non-GAAP S,G&A | ||||||||||
GAAP S,G&A | $ | 81,034 | $ | 62,613 | ||||||
Restructuring and transformation costs | (12,287 | ) | (5,792 | ) | ||||||
Non-GAAP S,G&A | $ | 68,747 | $ | 56,821 | ||||||
Non-GAAP operating expenses | ||||||||||
GAAP operating expenses | $ | 91,861 | $ | 71,383 | ||||||
Restructuring and transformation costs | (13,879 | ) | (7,148 | ) | ||||||
Contingent consideration income | — | 1,580 | ||||||||
Non-GAAP operating expenses | $ | 77,982 | $ | 65,815 | ||||||
Non-GAAP operating income | ||||||||||
GAAP operating income | $ | 9,901 | $ | 18,566 | ||||||
Restructuring and transformation costs | 23,667 | 8,529 | ||||||||
Contingent consideration income | — | (1,580 | ) | |||||||
Non-GAAP operating income | 33,568 | $ | 25,515 | |||||||
Non-GAAP income before taxes | ||||||||||
GAAP income before taxes | $ | 8,590 | $ | 19,011 | ||||||
Restructuring and transformation costs | 23,667 | 8,529 | ||||||||
Contingent consideration income | — | (1,580 | ) | |||||||
Non-GAAP income before taxes | $ | 32,257 | $ | 25,960 | ||||||
Non-GAAP net income | ||||||||||
GAAP net income | $ | 6,547 | $ | 13,880 | ||||||
Restructuring and transformation costs | 23,667 | 8,529 | ||||||||
Contingent consideration income | — | (1,580 | ) | |||||||
Tax benefit associated with non-GAAP items | (6,684 | ) | (2,164 | ) | ||||||
Non-GAAP net income | $ | 23,530 | $ | 18,665 | ||||||
Non-GAAP net income per common share assuming dilution | ||||||||||
GAAP net income per common share assuming dilution | $ | 0.25 | $ | 0.54 | ||||||
Non-GAAP items after tax per common share assuming dilution | $ | 0.65 | $ | 0.18 | ||||||
Non-GAAP net income per common share assuming dilution | $ | 0.90 | $ | 0.72 | ||||||
Presented below are additional Constant Currency performance measures. We measure different components of our business at constant currency. We believe this information is useful for investors because it allows for an evaluation of the Company without the effect of changes in foreign exchange rates. These results convert our local foreign currency operating results to the US Dollar at constant exchange rates of 0.833 Euro to 1.00 US Dollar and 110 Yen to 1.00 US Dollar. They also exclude the results of our foreign currency hedging program described in Note 7 to our consolidated financial statements in our Form 10-K | ||||||||||
Three Months Ended | ||||||||||
9/29/2012 | 10/1/2011 | |||||||||
Non-GAAP revenues | ||||||||||
GAAP revenue | $ | 218,178 | $ | 179,445 | ||||||
Foreign currency effects | (14,983 | ) | (13,544 | ) | ||||||
Non-GAAP revenue - constant currency | $ | 203,195 | $ | 165,901 | ||||||
Non-GAAP net income | ||||||||||
Non-GAAP net income, adjusted for restructuring and transformation costs | $ | 23,530 | $ | 18,665 | ||||||
Foreign currency effects | (6,880 | ) | (3,213 | ) | ||||||
Income tax associated with foreign currency effects | 1,861 | 903 | ||||||||
Non-GAAP net income - constant currency | $ | 18,511 | $ | 16,355 | ||||||
Non-GAAP net income per common share assuming dilution | ||||||||||
Non-GAAP net income per common share assuming dilution, adjusted for restructuring and transformation costs | $ | 0.90 | $ | 0.72 | ||||||
Foreign currency effects after tax per common share assuming dilution | $ | (0.19 | ) | $ | (0.09 | ) | ||||
Non-GAAP net income per common share assuming dilution - constant currency | $ | 0.71 | $ | 0.63 | ||||||
Reconciliation of Non-GAAP Measures for FY13 and FY12 | ||||||||||
Six Months Ended | ||||||||||
9/29/2012 | 10/1/2011 | |||||||||
Non-GAAP gross profit | ||||||||||
GAAP gross profit | $ | 191,875 | $ | 178,698 | ||||||
Whole Blood Acquisition cost of goods sold adjustment | 9,788 | — | ||||||||
Restructuring and transformation costs | — | 1,381 | ||||||||
Non-GAAP gross profit | $ | 201,663 | $ | 180,079 | ||||||
Non-GAAP R&D | ||||||||||
GAAP R&D | $ | 20,235 | $ | 18,959 | ||||||
Restructuring and transformation costs | (2,134 | ) | (1,356 | ) | ||||||
Non-GAAP R&D | $ | 18,101 | $ | 17,603 | ||||||
Non-GAAP S,G&A | ||||||||||
GAAP S,G&A | $ | 148,659 | $ | 118,844 | ||||||
Restructuring and transformation costs | (18,183 | ) | (6,129 | ) | ||||||
Non-GAAP S,G&A | $ | 130,476 | $ | 112,715 | ||||||
Non-GAAP operating expenses | ||||||||||
GAAP operating expenses | $ | 168,894 | $ | 136,223 | ||||||
Restructuring and transformation costs | (20,317 | ) | (7,485 | ) | ||||||
Contingent consideration income | — | 1,580 | ||||||||
Non-GAAP operating expenses | $ | 148,577 | $ | 130,318 | ||||||
Non-GAAP operating income | ||||||||||
GAAP operating income | $ | 22,981 | $ | 42,475 | ||||||
Restructuring and transformation costs | 30,105 | 8,865 | ||||||||
Contingent consideration income | — | (1,580 | ) | |||||||
Non-GAAP operating income | $ | 53,086 | $ | 49,760 | ||||||
Non-GAAP income before taxes | ||||||||||
GAAP income before taxes | $ | 22,006 | $ | 42,705 | ||||||
Restructuring and transformation costs | 30,105 | 8,865 | ||||||||
Contingent consideration income | — | (1,580 | ) | |||||||
Non-GAAP income before taxes | $ | 52,111 | $ | 49,990 | ||||||
Non-GAAP net income | ||||||||||
GAAP net income | $ | 16,335 | $ | 30,828 | ||||||
Restructuring and transformation costs | 30,105 | 8,865 | ||||||||
Contingent consideration income | — | (1,580 | ) | |||||||
Tax benefit associated with non-GAAP items | (8,565 | ) | (2,350 | ) | ||||||
Non-GAAP net income | $ | 37,875 | $ | 35,763 | ||||||
Non-GAAP net income per common share assuming dilution | ||||||||||
GAAP net income per common share assuming dilution | $ | 0.63 | $ | 1.18 | ||||||
Non-GAAP items after tax per common share assuming dilution | $ | 0.82 | $ | 0.19 | ||||||
Non-GAAP net income per common share assuming dilution | $ | 1.45 | $ | 1.37 | ||||||
Presented below are additional Constant Currency performance measures. We measure different components of our business at constant currency. We believe this information is useful for investors because it allows for an evaluation of the Company without the effect of changes in foreign exchange rates. These results convert our local foreign currency operating results to the US Dollar at constant exchange rates of 0.833 Euro to 1.00 US Dollar and 110 Yen to 1.00 US Dollar. They also exclude the results of our foreign currency hedging program described in Note 7 to our consolidated financial statements in our Form 10-K. | ||||||||||
Six Months Ended | ||||||||||
9/29/2012 | 10/1/2011 | |||||||||
Non-GAAP revenues | ||||||||||
GAAP revenue | $ | 394,653 | $ | 350,014 | ||||||
Foreign currency effects | (27,800 | ) | (24,607 | ) | ||||||
Non-GAAP revenue - constant currency | $ | 366,853 | $ | 325,407 | ||||||
Non-GAAP net income | ||||||||||
Non-GAAP net income, adjusted for restructuring, transformation costs and contingent consideration income | $ | 37,875 | $ | 35,763 | ||||||
Foreign currency effects | (11,519 | ) | (6,416 | ) | ||||||
Income tax associated with foreign currency effects | 3,148 | 1,827 | ||||||||
Non-GAAP net income - constant currency | $ | 29,504 | $ | 31,174 | ||||||
Non-GAAP net income per common share assuming dilution | ||||||||||
Non-GAAP net income per common share assuming dilution, adjusted for restructuring, transformation costs and contingent consideration income | $ | 1.45 | $ | 1.37 | ||||||
Foreign currency effects after tax per common share assuming dilution | $ | (0.32 | ) | $ | (0.18 | ) | ||||
Non-GAAP net income per common share assuming dilution - constant currency | $ | 1.13 | $ | 1.19 | ||||||
Restructuring, Transformation and Other costs (in thousands) GAAP results include the following items which are excluded from adjusted results | ||||||||||
Three Months Ended | ||||||||||
9/29/2012 | 10/1/2011 | |||||||||
Whole Blood acquisition cost of goods sold adjustments | $ | 9,788 | $ | — | ||||||
Integration | 10,811 | — | ||||||||
HS Core | 4 | 3,217 | ||||||||
Restructuring and transformation | 2,361 | 5,322 | ||||||||
Transaction costs | 703 | — | ||||||||
Total restructuring, transformation and other costs | $ | 23,667 | $ | 8,529 | ||||||
Six Months Ended | ||||||||||
9/29/2012 | 10/1/2011 | |||||||||
Whole Blood acquisition cost of goods sold adjustments | $ | 9,788 | $ | — | ||||||
Integration | 14,606 | — | ||||||||
HS Core | (977 | ) | 3,217 | |||||||
Restructuring and transformation | 3,901 | 5,648 | ||||||||
Transaction costs | 2,787 | — | ||||||||
Total restructuring, transformation and other costs | $ | 30,105 | $ | 8,865 | ||||||